Average savings rate now 1.48%

Tuesday, 06 January 2009 11:30

The average savings rate is now 1.48 per cent, as interest rates are expected to fall further in 2009.

Since the Bank of England's historic cut in interest rates to two per cent in December, 77 per cent of savings providers have passed on their full cut to their customers.

This means 38 per cent of accounts are now paying one per cent or less, based on a balance of £5,000.

The fall in savings rates means many savers are now losing money in real terms on their savings.

Michelle Slade, analyst at Moneyfacts.co.uk, said: "The impact of high inflation and tax has meant that basic rate tax payers currently need to earn a rate of 5.13 per cent to break even, which is virtually impossible to find in the current market."

She added: "Moneyfacts has been recording savings rates since 1988 and if base rate is cut further this week as predicted we are likely to see the average rate drop to the lowest level ever seen.

"With so many accounts now paying such low rates and the number likely to increase, savers really need to make sure they review the rate they are getting."

Leading the pack on the Moneyfacts best buy tables for internet and easy access accounts are Anglo Irish Bank's Easy Access Deposit Issue 2 at 4.55 per cent, ICICI Bank UK's HiSAVE account at 4.50 per cent, Market Harborough Build Society's onthedot account at 4.15 per cent.

Anglo Irish Bank also has its 7- Day Notice Issue 2 account at 4.65 per cent.

At the bottom of the pile, Bank of Ireland (UK) is paying just 0.001 per cent on its Card Saver account.

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